Clunkers program coasting to a stop

The $3 billion federal “Cash for Clunkers” stimulus program has boosted car sales to record levels but also put many dealerships in a temporary financial pinch.

Steve Adams

The $3 billion federal “Cash for Clunkers” stimulus program has boosted car sales to record levels, but it also has put many dealerships in a temporary financial pinch.

Because of the federal government’s documentation requirements and processing delays, many dealers said they have been reimbursed for only a small fraction of the rebates they granted to car-buyers.

One local dealership, Jannell Ford of Hanover, stopped participating in the program Friday because it was getting overwhelmed with paperwork, general manager Bill Roderick said.

“It’s going to be too much of a scramble if we write any today or tomorrow,” he said.

The three-week-old program offers rebates of up to $4,500 to people who traded in older gas-guzzling models for newer cars with improved mileage ratings. The federal government said the program will end at 8 p.m. Monday as its funding runs out.

Jannell Ford sold 30 vehicles under the program, which accounted for about 40 percent of its new car sales over the last three weeks. But Roderick said the program could have been much more successful with better planning on the part of the federal government.

“Even the introduction of it was so last-minute that I don’t think they were expecting the response they got,” he said.

McGee Toyota of Hanover had sold 75 vehicles as of Friday, but Internet sales manager Josh Hetzel said the dealership was having little luck getting repaid by the government.

U.S. Sen. John Kerry on Friday asked Secretary of Transportation Ray LaHood to assign more staff to speed up reimbursements, saying delays threatened to torpedo the final days of the program.

Cash for Clunkers initially called for $1 billion in rebates. Congress increased the allocation to $3 billion in early August after the initial response from consumers far exceeded expectations.

BayState Ford in Stoughton sold 25 new vehicles under the program, but it only has been reimbursed for one so far, said sales manager Luis Pontes. Several vehicles’ documents were rejected and had to be resubmitted.

Cash for Clunkers accounted for 60 transactions at Best Chevrolet in Hingham, owner Scott Shulman said. The dealership is down to a 30-day supply of vehicles, which is less than half its typical levels for August, Shulman said.

“Has it been successful? I’d be foolish to say no,” he said.

General Motors eased dealers’ financial burdens on Thursday when it began offering 30-day, interest-free loans covering the amount of unpaid rebates. Without the lifeline, many dealers would have had to halt the program, Shulman said.

Shulman said the benefits of the stimulus program will extend far beyond the auto dealerships.

“It got the factories going again and that was intent: to get manufacturing rolling again in this country and I think that’s going to happen,” he said.